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Go check oDesk and see how much people are paid, what they can do, and their countries. You'll see how much you could be paid as a junior programmer. If you're a beginner, ask for few, and do your best: if it works, ask for more.
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Olivier PonsDec 21 '10 at 10:07

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@Oliver: Why don't you put that as an answer?
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Michael KDec 21 '10 at 13:44

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Bear in mind that question is hugely dependent on the region in which you work. UK wages versus Eastern Europe for instance, is quite as jump.
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OrblingDec 21 '10 at 14:15

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@Olivier Pons: online freelance sites like oDesk are not an actual poitner because they're a ripoff for western world. I guess they provide good value to third worlds developing countries with much less income. But they probably have governments that would prevent them to process payments via web. Or web services not permitting their country payments...
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Robert KoritnikDec 21 '10 at 15:37

This takes into account the fact that your employer will want to exploit you (you will always be underpaid), and allows for the overheads of having an employee on the books (training, heating the office, health and safety, equipment purchase etc).

How to work out your added value

Here are some scenarios that may help with your application of the above formula. These have been left in as an illustration of thought processes, you may want to simply skip to the end.

Internal software

Let's assume you do some work on an internal software product that helps to automate a previously manual process. Instead of that process taking an admin worker in Accounts all day to complete, they can now do it with a click of a mouse. The admin worker is now freed up to do other work and the Accounts department don't have to hire a new person to handle that manual process.

This is why they stumped up the cash from their budget to pay for you to develop this code for them in the first place.

You have saved the company the employer cost of a permanent admin worker - say $30,000. Therefore, you have justified your salary up to $10,000. In order to earn more, you need to provide more solutions that reduce the companies outgoings. As the company grows your contribution may affect a larger group of people, and as such your salary may increase (or you may be exploited more).

External software

Let's say you've just written a killer feature for your company's new commercial product. It retails at $3000, and the feature has caused an extra 100 units to be sold. (Your company is remarkable in that the sales force and developers get to chat freely by the water cooler). From that you deduce that your contribution was worth $300,000 to the company.

But... you didn't do it alone, did you?

The entire company exists to sell this product and everyone has made some kind of input - from the person who came up with the idea of the feature you implemented to you doing the coding to the marketing and the salesmanship that neatly cleaved the cash from the customer.

For argument's sake, let's assume that 10 other people were principal in making this feature a success. Therefore, by the formula above you justify $10,000 of your gross salary.

Open-source software

You work for free, don't you?

Only joking.

Assuming that you mean that your company provides free and open-source software (e.g. Ubuntu) then your company's income is dependent on alternative revenue streams (service contracts, advertising, philanthropist funding etc). As a result, matching your contribution to your salary is going to be hard.

which essentially states that you will never be able to work out directly what you are worth because you need to take into account a large number of contributing factors that are not available to you.

Realistically, you will have to compare yourself to others doing similar programming jobs in the same country. The problem there is that you are averaging out your individual contributions over the entire country which means that you won't be reaching your maximum earnings potential.

I'm not sure I get your formula. How am I suppose to know the value that I'm providing my company? I'm just a regular developer, delivering about 30% of my skills. How am I suppose to know if I'm really valuable to them?
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Luca MatteisDec 21 '10 at 13:53

@Luca Do you develop code for internal use, or do you work on a product that is sold?
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Gary RoweDec 21 '10 at 14:02

@Gary: All our software is actually open-source. I guess that's external. But there are some things I do that are internal. But mostly external.
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Luca MatteisDec 21 '10 at 14:03

The company's return on investment for an employee is not so easy to compute. For example, what if your work relies upon a large capital investment of the company? (E.g., a speech recognition engine) There are cases where anything less than the world's best programmer would result in a net loss.
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MacneilDec 21 '10 at 15:27

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@Macneil Good read. The final sentence says it all, really. Debating whether or not to delete my answer now. Think I'll leave it up and let people explore the link you provided.
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Gary RoweDec 21 '10 at 15:50

I keep a nose out on the market and occasionally get some offers I listen to. They give a rough estimate around how much you could achieve in terms of payment.

Also if you look at consultant firms they usually have a "ladder" with titles such as junior, senior etc. each with a pay-level and expected performance. If you meet up at consultant firms reqruitment events every now and then you can get the chance to see what the levels are like.

Get on the mailing list of a couple of reputable recruiters. You're not "actively looking", but you're "keeping an eye out for interesting opportunities". They will frequently include rate and salary information for positions in their e-mails.

Check job listing sites that quote rates or salaries. Most listings don't publish the rates or salaries, but once in a while you'll find some.

You can also check out the Occupational Outlook Handbook published by the Dept of Labor. Here is the page on Computer Software Engineers and Computer Programmers (see the Earnings section). It lists average salaries, etc. but may not be specific to your geographic location, expertise, or industry.

Once you start seeing the rates for various types of positions then you'll start to see the variability that role, experience, location, and industry make in determining compensation. From there you'll have to figure out what applies to you (and what to do next).

This is likely to be quite a different take as this isn't looking at compensation relative to others but rather in contrast to the rest of your life. Do you make enough to pay your bills and live a good lifestyle? Good being rather subjective here obviously as some people can live on a shoestring and others want to make millions each year. Another point here is to note that there are things beyond salary in terms of compensation that should also be counted though some of these can be hard to quantify such as how good is the work environment, the quality of the work being requested and personal satisfaction in doing it.

I have no friends who currently have a job, and I have done research on payscale but I have not been able to find out how much other people get paid in the company?
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DukeDec 21 '10 at 10:03

@Duke - studies within organizations with a public pay scale have shown that providing the pay scale to the employees (as in: I know you are level X and therefore you make $Y) results in more unhappiness than not knowing, so it is not surprising that you can't find out. OTOH being carefully evaluated by your boss during performance reviews raises happiness, so if you aren't getting good feedback that give you an idea of their satisfaction, work towards it.
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justktDec 21 '10 at 15:39

Well not necessarily. Only people that think are paid enough tend to tell you... Others will lie because they may be ashamed of their low payment.
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Robert KoritnikDec 21 '10 at 15:53